Is Core Scientific Done? Bitcoin Miner Needs Cash, Warns Of Bankruptcy As Stock Plummets

Zinger Key Points
  • In a statement to shareholders, the company states it may lose all its cash reserves before the end of the year.
  • Core Scientific will not fulfill payments that are due in the next few days, the company reveals.
Is Core Scientific Done? Bitcoin Miner Needs Cash, Warns Of Bankruptcy As Stock Plummets

Core Scientific CORZ stock nose-dived by nearly 77% after it warned shareholders of a potential bankruptcy if it failed to improve its financial condition.

The company, one of the world’s largest Bitcoin BTC/USD miners, told shareholders that it can't pay off its debt and will be seeking a variety of options to address its shortfall, including hiring advisers and selling assets in an attempt to raise capital.

“Given the uncertainty regarding the Company’s financial condition, substantial doubt exists about the Company’s ability to continue as a going concern for a reasonable period of time,” Core Scientific stated.

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The company’s value has plummeted more than 97% to date. Its stock was trading at 26 U.S. cents, after making a day’s low of 23 U.S. cents at the time of writing.

The Bitcoin mining firm further stated that it was “severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs, the increase in the global bitcoin network hash rate, and the litigation with Celsius.”

According to court documents released earlier this month, insolvent cryptocurrency lender Celsius CEL/USD owes Core Scientific millions of dollars in unpaid electricity costs.

According to the miner's court filing, it is losing almost $53,000 every day to make up for Celsius' refusal to pay.

It added that it anticipates its cash reserves to get depleted by the end of the year or possibly sooner.

"Substantial doubt exists about the company’s ability to continue as a going concern for a reasonable period of time," the company stated.

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Compared to Sept. 30 when it had 1,051 Bitcoin (worth $21.6 million) and $29.5 million in cash, Core held just about 24 Bitcoin (just under $495,000 at today's value) as of Wednesday, a significant drop in value.

The Bitcoin miner is looking into a variety of strategic solutions for raising money.

It has retained PJT Partners LP as a financial adviser and Weil, Gotshal & Manges LLP as legal counsel.

According to Core Scientific, if the potential capital raise strategies fail, the company might have to seek bankruptcy protection.

According to the statement, the Austin, Texas-based company would forgo payments due in late October and early November 2022 on a number of its equipment and other financings and that the creditors may choose to sue the company for non-payment or take action with respect to the collateral.

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